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AI & Mortgages: How the Tech Helps Families Staunch Rate Hikes

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Recent interest hikes to fight inflation in the U.S., E.U., U.K., and Australia are increasing mortgage rates for families. There are a few ways how AI can help the market.

Lots of families have been caught in the crossfire of the ongoing battle between central banks across the Western world and the dreaded ghost of inflation. Some of the largest global financial institutes, such as the Federal Reserve, the European Central Bank, the Bank of England, and the Reserve Bank of Australia, have kept raising interest rates to fight inflation for an entire year. Rates grew from the negative numbers that characterized markets in the last decades to up to 5.25% in the U.S., the highest since 2007.

Whether this strategy is sound or not (many experts think it will only accelerate a downward spiral toward economic recession), this increase in interest rates has a straightforward consequence: a steep rise in mortgage rates.

Families who bought a house with a variable mortgage rate saw their monthly repayments increase by up to 70%. For people who want to buy a new house, things are not going any better, either.

AI to the Rescue?

The question arises: is artificial intelligence (AI) a saving force that can rescue many people who now risk becoming destitute? Does the technology have the capability to save the real estate market from crashing and causing another global financial crisis?

To be honest, no – not to that extent, at least. That’s too much responsibility for just a handful of smart tools, no matter how innovative they are. However, that shouldn’t stop us from exploring how AI is changing the mortgage industry – because it has been, and quite substantially, too. Some of these changes can help families improve their chances of finding their “dream house” and provide the market with some more resilience, and that’s very important to at least avoid the devastating consequences of a crash.

Below, we look at how AI is revolutionizing the future of mortgage lending.


Helping People With Their Home Search Efforts

Besides increasing the cost of mortgages alone, increased interest rates are putting significant pressure on house prices, making it even harder for families to buy a new house. However, new AI-backed real estate portals are emerging to make this process easier and more streamlined for agencies and consumers.

Thanks to solutions that leverage the computer vision capabilities which come from driverless car technology, next-gen home search portals can analyze house pictures from the listings, examine the rooms, assess the conditions of the interior and exterior of the building, and establish their value.

It also makes creating listings much easier by generating property photo captions and coupling them with automated descriptions. All this can help real estate agencies provide better offers and families find the best alternative to match their needs.

Enhancing Underwriting and Risk Assessment

If there’s something AI is good at, it is its analysis capabilities that allow it to go through vast volumes of data in a much shorter amount of time than humans. This capability is critical when automating the mortgage underwriting process with no risk of losing precision. AI-based tools can breeze through asset and bank statement reviews to ensure funds are available or scan countless documents to spot undisclosed information.

Besides making every operation in mortgage origination and closing much quicker and more efficient, it can help detect fraud or properly assess any risk of insolvency. In a time where rates keep rising at such an incredible pace, identifying potential subprime lenders beforehand is extremely important to guarantee the stability of the entire global economy.

Also, AI-powered underwriting methods are based on data analysis that is much less fallible and more objective than human judgment, leading to more equitable deals.

Offering Better Deals to Customers

One of the indirect consequences of the increase in mortgage rates is the necessity for many families to convert their loans from variable to fixed rates. And when millions of people are looking for a renegotiation, financial institutes can become quite hectic. Yet, not complying with customers’ requests or not offering an alternative that is truly affordable for them may have dire consequences on a much larger scale.

If the number of insolvents increases, the tightness of the system is at risk and may generate a vicious cycle that will cause everyone (not just the people who can’t pay their mortgages anymore) to suffer.

AI can help streamline the lending and refinancing process by helping employees and customers answer all their concerns and questions. By combining the ability of the human customer service workforce with smart customer service bots, clients’ requests can be answered in a matter of minutes rather than hours.

AI solutions can analyze customer data, help human representatives visualize what matters, suggest potential solutions to issues, and devise better-individualized payment plans to ensure everyone is satisfied (and still able to keep paying their mortgages).

AI-Powered Mortgage Advisors

Obtaining a mortgage is a very complex and often overwhelming process. You need to find the house you like within a certain budget and then ask a bank to provide you with the money to buy it. Seems easy, doesn’t it? Well, it isn’t, especially when it’s the first time you do that, and you still don’t know the many traps and pitfalls you will encounter in this competitive industry.

People who never bought a house often need to rely completely on the advice of real estate agents or bank employees, but these players may ultimately have their interests at heart rather than the customers. Ultimately, they can force their hands to let you overextend in a purchase you cannot afford or get stuck with a terrible deal that will last for a lifetime.

AI advisors, on the other hand, are truly neutral advisors that have no:

  • Personal interest
  • Financial stake
  • Secret agenda

They will simply take your financial information, check your preferences, compare your data and needs to the current market standards, and then provide you with the cleanest route to an ideal homeowning goal.

AI advisors can explore the areas you can improve to maximize your chances of obtaining a mortgage, suggest houses that you can afford within your budget constraints, and estimate a timeline to find the house of your dreams.

The Bottom Line

Once again, AI encapsulates the definition of “harder, better, faster, stronger,” even in the mortgage industry. AI tools will not reinvent the wheel, but they’re improving nearly every other aspect of what exists but doesn’t work as it is supposed to.

Hopefully, this help from machines will be sufficient to stabilize the market and prevent the dreadful consequences of a collapse. But in the end, if it doesn’t, we as humans will have no one else to blame than ourselves.


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Claudio Buttice
Data Analyst
Claudio Buttice
Data Analyst

Dr. Claudio Butticè, Pharm.D., is a former Pharmacy Director who worked for several large public hospitals in Southern Italy, as well as for the humanitarian NGO Emergency. He is now an accomplished book author who has written on topics such as medicine, technology, world poverty, human rights, and science for publishers such as SAGE Publishing, Bloomsbury Publishing, and Mission Bell Media. His latest books are "Universal Health Care" (2019) and "What You Need to Know about Headaches" (2022).A data analyst and freelance journalist as well, many of his articles have been published in magazines such as Cracked, The Elephant, Digital…